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Capital Metro PPP Contract Summary

Contract Summary

June 2016

Prepared by Capital Metro Agency


Foreword

This Contract Summary provides information about the contractual nature of the

Capital Metro Project (Project) as at the point of Financial Close.

The first part of this summary provides a broad overview of the Project, including

the rationale for undertaking it as a Public Private Partnership (PPP), a summary

of the tender process and the Project timetable. The second part focuses in

more detail on the key commercial features of the Project, including the main

parties and their general obligations, the value-for-money calculation for the

Project, the broad allocation of risk between the public and private sectors and

the treatment of various key Project issues.

The ACT government is committed to providing better services by expanding

and improving the Territory’s public infrastructure and, where appropriate, using

private sector expertise to design, finance, build, operate and maintain

infrastructure projects. To achieve this objective the Territory has developed

The Partnerships Framework – Guidelines for Public Private Partnerships to

provide a transparent framework for the development and delivery of PPP

projects. The Partnerships Framework supports the National Public Private

Partnerships Guidelines and links with existing government policy on capital

procurement and funding. Further information on the framework is available at

http://apps.treasury.act.gov.au/partnerships-framework.

This summary should not be relied on as a complete description of the rights

and obligations of the parties in respect of the Project which are governed by the

Capital Metro Project Agreement and associated Project documentation. The

Project Agreement is available online at www.procurement.act.gov.au/contracts.

http://apps.treasury.act.gov.au/partnerships-framework

http://www.procurement.act.gov.au/contracts


Contents

1.0 Project Overview ..................................................................................... 1

1.1 The Capital Metro Project 1

1.2 Aspirations and Objectives 6

1.3 The Capital Framework 7

1.4 Tender Process 9

1.5 Project Milestones 11

2.0 Commercial Features ............................................................................ 12

2.1 Project Documents 12

2.2 Project Costs and Value for Money 13

2.3 Risk Transfer 17

2.4 General Obligations of Canberra Metro 18

2.5 General Obligations of the Territory 18

2.6 Payment Mechanism and Abatement Regime 19

2.7 Proximate Territory Works 20

2.8 Default, Termination and Step-In Regimes 21

2.9 Finance 22

2.10 Territory Rights at Expiry of Contract 23

2.11 Current Version 23

Appendix A – Useful references .......................................................................... 24

Appendix B – Key contact details ....................................................................... 25

Appendix C – RFP Evaluation Criteria ................................................................. 26

Appendix D – General Risk Profile ...................................................................... 29


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1.0 Project Overview

1.1 The Capital Metro Project

1.1.1 Overview

On 17 May 2016, the government of the Australian Capital Territory (Territory) entered into an Agreement

with Canberra Metro PC Pty Ltd (Canberra Metro) for the design, construction and financing of a 12

kilometre light rail service from Gungahlin to the City. The Agreement also includes for the operation and

maintenance of the light rail system over a 20-year period.

The Project is the first stage of a light rail network that will have a transformative effect on Canberra. It

represents a substantial financial investment by both the ACT Government and the private sector in our

city. The light rail system will redefine the entrance to the nation’s capital and will play a vital role in

ensuring Canberra’s future as a vibrant, sustainable city.

The Capital Metro Project is the most significant transportation infrastructure project ever undertaken by the

Territory. As well as establishing a world-class public transportation system befitting Australia’s capital city,

the project will promote urban regeneration and provide social benefits to the local community.

The Project is the largest public private partnership (PPP) being undertaken by the Territory. The Territory

elected to procure the Project as an availability based PPP having assessed the Project in accordance with

the Territory’s The Capital Framework. The PPP procurement approach was selected for this Project on the

basis of it providing for:

Cost certainty to the Territory;

A transfer of risks to parties best suited to manage those risks; and

An enhanced scope for innovation compared to other delivery models.

1.1.2 The Consortium

The Canberra Metro consortium chosen to deliver the Capital Metro Project comprises Pacific Partnerships

(operator and equity investor), CPB Contractors (builder), John Holland (builder, operator and equity

investor), Mitsubishi Corporation (equity investor), Aberdeen Infrastructure (equity investor), Deutsche

Bahn Engineering and Consulting (operations consultant) and CAF (light rail vehicle supplier). These

consortium members all have national and international experience in delivering social infrastructure PPPs.

1.1.3 The Project

1.1.3.1 Key features

Encompassing the design, construction, light rail vehicle supply, operations, maintenance and financing of

a light rail route from Canberra’s central business district to the Gungahlin town centre, Canberra Metro will

deliver 12 kilometres of light rail track, 13 stops, 14 light rail vehicles, a maintenance depot and 20-years of

operations.

The light rail stops and termini will be safe, functional, highly visible, accessible and demonstrate design

excellence. The stops and termini will comply with the requirements of the Project Agreement, including:

being consistent with a modern, efficient and rapid transport system

offering an attractive and comfortable journey experience

providing a safe, seamless, easy to use and high quality transport system

being innovative in concept, elegant and contemporary in expression and functional


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1.1.3.2 Key stages

The Project comprises two key phases:

the delivery phase during which the rail alignment, road modifications and associated stops and

buildings will be designed, constructed, commissioned and completed

the operating phase during which the light rail system will be in operation and will be maintained by

Canberra Metro for a 20-year period

1.1.3.3 Delivery Phase

Canberra Metro must design and construct the system in accordance with the Project Agreement and in

accordance with relevant planning requirements. Canberra Metro must also comply with all prescribed

standards, including standards prepared by the Territory and Municipal Services directorate.

In addition to the construction of the light rail track and stops, the scope of the Project during the Delivery

Phase includes the following:

Relocation and/or protection of relevant utilities

Undertaking of all necessary preparatory works

Provision of power supply and transmission systems, including necessary substations

Provision of light rail vehicles

Design and construction of a depot, including stabling yard and operations centre

Design, construction and provision of signalling systems

Provision of way-finding and customer information systems

Urban design and landscaping

Design and provision of supporting infrastructure for Electronic Ticketing System (ETS) equipment

Community engagement and stakeholder management activities

System commissioning

Canberra Metro has already commenced its design of the system and will begin substantial construction in

the coming months. Construction will start in Gungahlin and work its way along Flemington Road and down

Northbourne Avenue to the City. It is anticipated that construction of the system will be complete in late

2018.

The Delivery Phase will end on the Date of Services Completion, being when the Works (certain specified

work not required for the operation of the System and minor defects) are completed and certified by the

Independent Certifier for the Project as having passed all specified completion tests and met all specified

completion requirements.

1.1.3.4 Operations Phase

Canberra Metro will design and supply 14 modern electrically powered light rail vehicles that will operate on

fixed track at road level. The light rail vehicles will be separated from traffic, will be designed and built to

international standards and will be capable of carrying a minimum of 200 people at any one time.

During the Operations Phase, Canberra Metro will maintain the light rail vehicles at a new maintenance

facility off Flemington Road. Canberra Metro will also be responsible for maintaining all the stops and

associated infrastructure.

In addition to basic operation requirements, Canberra Metro will undertake the following:


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Light rail vehicle maintenance and whole of life management

Track and systems maintenance and whole of life management

Depot operations and management

Provision of customer service

Management of revenue protection

Corridor maintenance

First line and aesthetic maintenance of Electronic Ticketing System (ETS) equipment

Community engagement and stakeholder management activities

Adherence to Project plans and ongoing reporting requirements

End-of-term Handover

The Operating Phase is expected to commence by early 2019 and will run for 20 years. Canberra Metro

will operate the system 365 days a year. The first and last service for each day is shown in Table 1. The

required service frequency of the system is shown in Table 2.

Table 1: First and Last Required Services – Initial Timetable

Day Departure time from Gungahlin

Place Stop

Departure time from Alinga

Street Stop

First service Last service First service Last service

Monday to Thursday 0600 2300 0600 2330

Friday 0600 0030 Saturday 0600 0100 Saturday

Saturday 0600 0030 Sunday 0600 0100 Sunday

Sunday 0800 2300 0830 2330

Table 2: Required Service Frequency – Initial Timetable

Day Departure time from Gungahlin

Place Stop

Departure time from Alinga Street

Stop

Departure Time Interval Departure

Time

Interval

Monday to Friday 0600 - 0700 15 minutes 0600 - 0700 15 minutes



Monday to Friday 0900 - 1600 10 minutes 0900 -1600 10 minutes


Monday to Friday 1730 -1800 10 minutes 1730 -1800 6 minutes

Monday to Friday 1800 - last 15 minutes 1800 - last 15 minutes

Saturday All day 15 minutes All day 15 minutes

Note: The journey time between the City and Gungahlin will generally take 24 minutes or less.


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1.1.4 The Project site

The Project will link Canberra’s northern suburbs with Canberra’s central business district. As generally

shown in Figure 1, the route for the Project commences in Hibberson Street and travels east along

Flemington Road before turning to the south. There, it travels along Canberra’s primary approach route via

the Federal Highway and Northbourne Avenue

Figure 1: Route for Capital Metro


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Along the Project route, the light rail system will:

• comprise standard gauge, double track;

• be embedded track form except between Well Station Drive to Randwick Road and raised embedded

track between Gungahlin Place to Kate Crace Street; and

• have a median alignment, except along Flemington Road between Sanford Street and the Federal

Highway where it will be aligned to the western verge.

On Hibberson Street in Gungahlin the median alignment will run through a pedestrian and light rail vehicle

(LRV) only zone between Gungahlin Place East to Kate Crace Street.

During the Delivery Phase Canberra Metro will integrate the light rail network into Canberra’s existing

infrastructure, which will necessitate changes to the road network, particularly at intersections. Kerb

widening, lane adjustments and existing intersection modifications will be required to accommodate the

alignment. Modifications will generally comprise:

modifications to intersection layouts

modifications to traffic signal phasing

installation of new traffic signals

removal of a number of right-turns (i.e. across the median)

widening of the road carriageway

lane duplications and removals

relocation and/or protection of relevant Utilities

changes to property access.

1.1.5 Integration

Once complete, the light rail system will form the backbone of public transport services in the City to

Gungahlin corridor, with bus routes modified to integrate with the light rail. Optimised integration with the

bus network is essential to achieving the desired customer experience. In this regard:

the main interchange locations for passenger transfers between bus and light rail will be Gungahlin

Town Centre, Dickson and the City. The light rail stops and associated facilities at these locations will

provide for convenient, smart and seamless transfers

the light rail ticketing system will be fully integrated into an overall Territory public transport ticketing

system

the passenger information system will be fully integrated with the NXTBUS real-time information system

to provide light rail passengers with full information on connecting buses, and bus passengers with full

information on connecting light rail services. Passenger information displays will be provided at all light

rail stops and onboard all light rail vehicles

effective integration with other connecting transport will be required, noting the Territory’s commitment

to active travel.


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1.2 Aspirations and Objectives

1.2.1 Project Aspirations

The Territory’s vision for this Project is that Capital Metro shall boost Canberra’s sustainable development

by changing and improving transport options, settlement patterns and employment opportunities. To

support the delivery of this vision in Canberra, the Territory has four key aspirations for the Project. These

aspirations, which guide all elements of the design and procurement of the project, revolve around

customer experience, urban design, the community and affordability.

1.2.1.1 Customer experience

To attract Canberrans to public transport through frequent, reliable, easy to use, seamless, safe, clean and

modern light rail services:

Mode Share: Increase the mode share of public transport

Frequency: Optimise frequency and service reliability

The travel time on light rail is 24 minutes from Gungahlin to the City. High reliability of travel time will be

facilitated by fully segregating light rail from road traffic between intersections, providing effective light rail

priority at all intersections and ensuring that all road and light rail interfaces are fully controlled by traffic

lights.

1.2.1.2 Urban design

To provide a light rail system that demonstrates excellence in urban design befitting its prominent location

in the primary gateway to Australia's capital city. The system will exhibit exemplary and creative integration

with the built environment and stimulate urban renewal.

Stimulate sustainable urban redevelopment along the corridor

Revitalise the Northbourne Avenue corridor

1.2.1.3 Community

To engage local industry, minimise disruption and reflect the Territory’s environmental focus in the Project’s

delivery and operations:

Grow a more diversified Canberra economy

Increase social and economic participation

Reduce carbon and other emissions

1.2.1.4 Affordability

To procure a light rail system that is affordable for the ACT community:

Affordable capital and operational costs

1.2.2 Project Objectives

The Project’s primary objective is to provide the Territory with a light rail system that has the capacity and

contemporary technologies to meet the needs of the community for the next period of Canberra’s growth. A

number of key objectives for the Project (as noted above) include:

1.2.2.1 Increase the mode share of public transport

When complete the Capital Metro system will increase the number of trips taken using public transport.

The main focus is to move people from car-based trips to Capital Metro. In addition, a new, legible and


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easy to use service will generate trips, particularly into the central retail and commercial precinct of the

City

The service will be safe, convenient, attractive, frequent, reliable, affordable and integrated with a

modified bus and pedestrian network.

1.2.2.2 Optimise frequency and service reliability

Light rail on dedicated track is one of the most reliable forms of public transport service. Capital Metro

will provide commuters and other users with high levels of on-time running

1.2.2.3 Stimulate sustainable, urban re-development along the corridor

The Northbourne Avenue corridor is ear-marked for significant growth via re-development. Capital

Metro is a complementary project that supports higher density land use, which in turn increases

patronage on the service.

1.2.2.4 Grow a more diversified Canberra economy

Capital Metro will be a direct and indirect stimulus to a Canberra economy that needs to diversify its

base to reduce its reliance on government administration and defence

A world-class transport service will support economic activity in many ways. It will improve vital

connections between people, stimulate business innovation, and assist in attracting and retaining skilled

workers, enterprising businesses and students to Canberra.

1.2.2.5 Affordable capital and operational costs

The service will be developed with financial prudence and value for money outcomes for the Territory

1.2.2.6 Revitalise the Northbourne Avenue corridor

The Northbourne Avenue corridor is a gateway to Canberra for residents entering the City or visitors

entering from the north. Revitalisation will make it a more active and socially connected precinct for all

types of Canberrans and a fitting gateway to the nation’s capital.

Capital Metro will increase activity at ground level and boost the image of the City.

1.2.2.7 Increase social and economic participation

The service will provide greater opportunities for people who do not own a motor vehicle to access jobs,

education, health services and other social activities.

1.2.2.8 Reduce carbon and other emissions

The additional passenger capacity and demand will replace trips by motor vehicle and consequently

reduce greenhouse emissions. In addition, other motor vehicle emissions such as particulate matter,

nitric oxides and carbon monoxide would also be reduced.

The economic benefits taken into consideration in the Full Business Case cover operational emissions

and take into account increased fuel efficiency over time.

1.3 The Capital Framework

1.3.1 Procurement assessment

During the business case development phase, the Territory considered a range of procurement models and

identified several delivery methods for detailed assessment, such as:


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Unbundled construction based models that separate the procurement of the design and construction of

the system from its ongoing operation and maintenance

A DCMO (Design, Construct, Maintain and Operate) procurement model involving a Designer,

Constructor, Maintainer and Operator (and potentially rolling stock and other contractors) entering into a

long term contract to provide the infrastructure services, where the risk of delivery is jointly held by all

parties over the contract term

A PPP (Availability) procurement model that involves private sector finance and ownership of the project

over the concession term. An Availability PPP transfers the risk of providing the infrastructure as

required services over the term but does not include transfer of patronage risk (i.e. how many people

use the infrastructure)

A range of key procurement drivers were considered in evaluating different procurement models including

ensuring the achievement of:

price certainty and certainty of costs over the life of the asset

optimal risk allocation

providing whole of life incentives for innovations in design and operations

timely delivery of the Project, including greater certainty and a reduction in time to delivery

optimal whole-of-life costs and value for money

an efficient and appropriate system design (including safe and secure)

service and maintenance standards over the life of the asset

flexibility in operations over the life of the asset

a competitive outcome.

After a detailed assessment of the various delivery models, a PPP procurement model was identified as the

preferred option. This was assessed as the preferred procurement model on the basis that:

risk transfer under a PPP approach would allow the Territory to retain an acceptable level of risk on the

complex design and construction of the Project, as a brown-field development across 12 kilometres of

key Territory infrastructure

PPP delivery transfers maintenance and facilities management risk, site risk, asset capability risk and

interface risk to the private sector in an integrated manner

PPP delivery provides optimal whole-of-life costs as the private sector is responsible for long-term

maintenance and facilities management in addition to design and construction, which should drive an

optimal whole-of-life outcome

there is sufficient market depth to allow the Territory to achieve a competitive outcome through this

model

1.3.2 The Partnership Framework

As the Project is being delivered as a PPP, the ACT Government’s Partnerships Framework is of relevance

to the Project. The Partnerships Framework seeks to achieve better value for money by capturing the

expertise and efficiencies of the private sector in designing, financing, building and maintaining

infrastructure projects and providing services on a whole-of-life basis where appropriate.

The Partnerships Framework sets out Territory specific policy requirements, but otherwise requires

compliance with the National PPP Policy and Guidelines (National PPP Guidance) that apply across all

State, Territory and Commonwealth arrangements.


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Details of the National PPP Guidance and The Partnerships Framework are available at:

http://www.infrastructureaustralia.gov.au/ and http://apps.treasury.act.gov.au/partnerships-framework

respectively.

1.4 Tender Process

The Territory conducted a competitive tender process to identify the private sector party to deliver the

Project. The tender process was implemented in accordance with The Partnerships Framework to ensure

that the Territory received the best value-for-money outcome.

The tender process involved a call for registrations of capability from the market (through the issue of the

Expressions of Interest (EOI) document); receipt of EOI submissions; the subsequent issuing of a Request

for Proposal (RFP) to short-listed respondents; receipt of Proposals from short-listed respondents; and an

evaluation, clarification and pre-preferred negotiations phase followed by the appointment of a preferred

respondent and finalisation of contractual documentation for execution.

Table 3: Key procurement milestones

Date Tender Stage

31 October 2014 Invitation for EOI issued

19 December 2014 EOI proposals submitted

18 March 2015 Announcement of Shortlisted Respondents

April 2015 Release of RFP

4 September 2015 Submission of Proposals

1 February 2016 Announcement of Preferred Respondent

17 May 2016 Contract Close

24 May 2016 Financial Close

A formal project governance structure was put in place to oversee the tender process including the

evaluation of the detailed RFP process. The governance structure is represented diagrammatically in

Figure 2 below.

Figure 2: Project evaluation structure

http://www.infrastructureaustralia.gov.au/



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EOIs were received from four interested consortia and two were selected to proceed to the RFP stage.

Proposals were received from the two shortlisted bidders on 4 September 2015.

The RFP evaluations (including the impact of the clarification process) were conducted by an Evaluation

Panel, which was supported by an Evaluation Panel Sub-Committee and three discipline-based evaluation

sub-panels:

Design and Delivery

Commercial and Legal; and

Operations, Performance, Partnerships and Engagement.

The Evaluation Panel and sub-panel membership was selected based on stakeholder representation

(including the Capital Metro Agency, Treasury, the Environment and Planning Directorate, the Territory and

Municipal Services Directorate (TAMS) and an independent member) and requirements for appropriate and

relevant skills and experience. The sub-panels were supported by specialist advisers as required. The key

selection criteria used in the assessment of those proposals is represented in Appendix D.

As part of the extensive RFP evaluation process, both bidders were asked to respond to clarifications about

how their Proposals might address a number of issues highlighted during the evaluation process. A pre-

preferred negotiation process was also conducted to seek to resolve select commercial and technical

matters.

At the completion of the evaluation, clarification and initial negotiation process, Canberra Metro’s Proposal

was considered to represent best value-for-money. Accordingly, the Territory appointed Canberra Metro as

the preferred respondent and proceeded to negotiate the final form Project documents and executed the

Project Agreement and ancillary contracts that govern the Project.

The major strengths of Canberra Metro’s proposal were:

Strong alignment with the Territory’s objectives and aspirations for the Project, particularly in respect of

its customer experience, urban design and affordability aspirations

An effective customer experience approach, with a strong focus on transport mode shift and

incorporating a whole-of-organisation customer experience focus that will foster continuous

improvement and promote patronage growth on the system

A strong urban design outcome that will meet community expectations, enhance the urban environment

and ensure the optimum integration of the light rail with the landscape and built form, recognising the

location of the system along the gateway to the National Capital

A high quality light rail vehicle providing an excellent customer experience, including a greater carrying

capacity, 100% flat floors and reduced trip hazards

A design proposal that provides significant amenity to customers, including via stop canopies offering

effective weather protection as passengers board and alight and wider platforms offering superior cross-

platform windbreaks

A strategy and approach to construction and delivery that minimises disruption and impact on the

community during delivery and provides the Territory with reduced risk and greater certainty over

timeframes

A highly competitive, risk adjusted whole of life cost

The inclusion of active strategies to engage with and provide opportunities for local industry

An appropriate allocation of project risk between parties


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The tender process was undertaken within a robust probity framework and was endorsed by the Project’s

probity adviser based on the following probity objectives:

fairness and impartiality

use of a competitive process

consistency and transparency

security and confidentiality

Identification and resolution of conflicts of interest

compliance with Government policies as they apply to tendering

1.5 Project Milestones

As indicated in Table 4, the construction phase for the Capital Metro Project will be complete by late 2018

and operations will begin by early 2019.

Table 4: Key Project Milestones

Milestones Date

Contractual Close 17 May 2016

Financial Close 24 May 2016

Commencement of design and construction 25 May 2016

Completion of construction By late 2018*

Commence operations By early 2019*

End of Project Term 2039*

* Indicative


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2.0 Commercial Features

Part Two of this document outlines the contractual relationships between the parties involved in the Project,

including the broad allocation of risk and the obligations of both Canberra Metro and the Territory.

Capitalised terms used in this Part Two are defined in the Project Agreement unless otherwise noted.

2.1 Project Documents

On 17 May 2016, the Director General of the Capital Metro Agency, on behalf of the Territory, executed the

Project Agreement with Canberra Metro to design, construct and finance the Project and to operate and

maintain the Project over a 20 year period. Financial Close was subsequently achieved on 24 May 2016,

whereby remaining contractual and funding arrangements were finalised between the Territory, Canberra

Metro, its key subcontractors and debt and equity providers. The Project Agreement came into full force on

achieving Financial Close.

2.1.1 Project Parties

The relevant parties under the contractual arrangements are:

CMA: The Capital Metro Agency representing the Australian Capital Territory. CMA is the Territory

Government authority that has responsibility for leading the delivery of the Project on behalf of the

Territory

Canberra Metro: Canberra Metro PC Pty Limited in its personal capacity and as trustee for the Capital

Metro Trust is the main contracting party with the Territory. Canberra Metro has in turn entered into a

range of contractual relationships with its consortium partners to deliver elements of the Project.

Canberra Metro will be ultimately responsible for project delivery and will, among other things, provide

overarching management for the duration of the Project.

Equity Providers: John Holland Pty Ltd, Pacific Partnerships, Mitsubishi Corporation and Aberdeen

Infrastructure have committed to and will provide the equity required for the Project by Canberra Metro

Debt Financiers: Canberra Metro has arranged its project debt funding through the involvement of a

number of financiers (including Bank of Tokyo-Mitsubishi UFJ Ltd and local and international banks)

D&C Contractor: An unincorporated joint venture between John Holland Pty Ltd and CPB

Constructions Pty Ltd have been engaged by Canberra Metro to design, construct and commission the

Capital Metro Project on behalf of Canberra Metro

O&M Contractor: Canberra Metro Operations Pty Ltd, a joint venture between John Holland Pty Ltd

and with Pacific Partnerships Pty Ltd, will operate and maintain the light rail system for the 20 year term

in association with Deutsche Bahn Engineering and Consulting

LRV Supplier: Construcciones y Auxiliar de Ferrcarriles S.A. (CAF) will provide the LRVs under a

subcontract with the D&C Contractor

Independent Certifier: The Capital Metro Agency and Canberra Metro have jointly engaged APP

Corporation Pty Ltd to act as the independent reviewer in respect of the Project

2.1.2 Project Contractual Relationships

The relationship between the Territory, Canberra Metro and other related parties is detailed in the Project

Agreement and associated documentation. The structure and principal contracts required for the delivery of

the Project are outlined in Figure 3 below.


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Figure 3: Contractual relationships under the Project Agreement

2.2 Project Costs and Value for Money

2.2.1 Background

Three key cost figures are associated with the project:

The project’s construction costs: Under a PPP project, the Territory is not ‘out of pocket’ for the

Project’s initial construction costs during the Project’s construction phase. Notwithstanding this,

jurisdictions around Australia typically use a project’s construction cost as a key metric in publicly

describing the size of a project;

Availability payments: Once light rail services have commenced, the Territory will make regular

monthly payments to Canberra Metro over 20 years. These payments cover Canberra Metro’s

construction, operational, maintenance, life-cycle and financing costs; and

The project’s Net Present Cost: This is the total net present cost to the Territory of the availability

payments, Territory project contribution and the value of Territory-retained risks over the entire term of

the contract.

2.2.2 The Project’s Construction Costs

The project’s design and construction costs are $707 million. This includes both Canberra Metro’s design

and construction costs and the value of a contingency applied to the project by the Territory in respect of

Territory-retained risks. This contingency may or may not be incurred. The anticipated construction cost

(i.e. including the contingency) is $76 million, or 9.7%, better than had been estimated in the project’s Full

Business Case.


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Table 5: Project Construction Costs

Cost Component Cost ($ million, nominal)

D&C Costs 589

Territory-retained Risk Contingency 117

Total D&C Cost 707

Previous Business Case Estimate 783

Difference to Business Case (76) or (9.7)%

2.2.3 Availability Payments

As noted above, once light rail services have commenced, the Territory will make regular monthly

payments to Canberra Metro over 20 years. These payments cover Canberra Metro’s construction,

operational, maintenance, life-cycle and financing costs.

This section sets out the expected availability payment profile as at the time of this summary. The project’s

availability payment profile may change over time for reasons which include:

The Territory ‘abating’ payments for Canberra Metro’s failure to meet service quality and on time

running standards;

The occurrence of Territory-retained risk events which are financed through the availability payment

regime; and

Periodic debt refinancing throughout the term of the contract.

In the first 12 months of operations (which falls across financial years), availability payments to be made by

the Territory are $47 million. In the last 12 months of operations, availability payments to be made by the

Territory are $75 million. As at Financial Close, the project’s availability payment profile (annualised) is as

follows ($million, nominal):

Table 6: Availability Payments

Financial

Year Ended

30 June:

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Availability

Payments

($’000s)1

36,061 54,269 54,719 55,841 56,811 59,240 59,316 62,970 60,237 61,870 62,954

Financial

Year Ended

30 June:

2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Availability

Payments

($’000s)1

64,257 67,025 67,296 78,534 68,971 70,461 71,370 73,329 75,884 12,937 0

Note 1: Figures in Table 6 are in nominal (future) dollars

The Availability Payments are graphically represented in Figure 4 below:


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Figure 4: Availability Payments

The availability payment figures listed above:

Are not ‘smooth’ over the term. This reflects different asset refurbishment activities occurring throughout

the term;

Do not include the Territory contribution to the project of $375 million, which will be made upon services

commencement; and

Do not include a contingency amount for Territory-retained risks.

2.2.4 Net Present Cost

The project’s net present cost (NPC) is $939 million (measured as at 1 January 2016). That figure includes:

The NPC of all availability payments made by the Territory over the contract’s 20 year operating term;

The NPC of the Territory contribution to the project; and

The NPC of the value of the contingency applied to the project by the Territory in respect of Territory-

retained risks.

Table 7: Net Present Cost

Cost Component Net Present Cost ($ million)

Territory Payments

Net Present Cost ($ million)

Direct Cost Breakdown

Availability Payments 520 -

Territory Contribution 305 -

D&C - 534

Operating Costs and Lifecycle - 269

Financing, SPV and Other - 22

Territory-retained Risk Contingency 114 114

Net Present Cost (7.52% discount

rate)1

939 939

For comparison – 8.52% discount rate 879 879


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For comparison – 6.52% discount rate

(Territory Contribution only)

948 948

For comparison – 6.52% discount rate 1,007 1,007

Note 1: The discount rate was calculated in accordance with methodology set forth in the Australian Government National Public Private Partnership Guidelines, Volume 5.

The graph in Figure 5 provides an indication of components of the total net present cost:

Figure 5: Net Present Costs Component

The project’s net present cost is 10.7% better than the ‘public sector comparator’ contained in the project’s

Full Business Case once adjusted to a common measurement date of 1 January 2016 ($ million):

Table 8: Net Present Cost Comparator

Cost Component Business Case

Estimated PSC

NPC (1 July 2014)

Business Case

Estimated PSC NPC

(1 January 2016)

Actual Project

NPC (1 January

2016)

Difference

Net Present Cost 970 1,051 939 (112) or (10.7)%

Note 1: Public Sector Comparator discount rate of 5.52%

2.2.5 Securitised Licence Structure

Canberra Metro will undertake the Project pursuant to a Securitised Licence Structure. Securitised licence

arrangements are a common, tax effective feature in PPP transactions and are a means of transferring

funding from the financing arm of the consortia to the construction and operating arm of the consortia.


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Under the Securitised Licence Structure for the Project, Canberra Metro will be responsible for the following

activities:

The design and construction of the Works and any other item, goods or services pursuant to the Project

Agreement, in return for the Territory agreeing to pay Canberra Metro a series of Construction

Payments (including the Territory Contribution)

Obtaining a Delivery Phase Licence and Operating Phase Licence from the Territory to access the land

and (during operations) the constructed light rail assets

Making Licence Payments to the Territory pursuant to the Operating Phase Licence;

The provision of the Operations and Maintenance Activities to the Territory during the Operating Phase

and the provision of maintenance on the Maintained Assets during the Operating Phase

The provision of committed financing for the Project.

A Finance Company has been established solely for the purpose of securitising assets and providing

financing for the Project. In this regard, the Finance Company is contractually restricted by the transaction

documents and/or its constituent documents to activities necessary to perform that role.

The Finance Company will purchase the Territory’s right to receive future Licence Payments (payable by

Project Trust to the Territory) by making a Receivables Instalment Payment to the Territory in amounts

equivalent of the Construction Payments to be made by the Territory to Canberra Metro. The result of this

is that:

With the exception of the Territory Contribution, the Territory will not be required to pay any

Construction Payment to Canberra Metro in excess of the amounts paid to it by the Finance Company;

Over the Delivery Phase, the Finance Company will pay the Receivables Instalment Payment directly to

Canberra Metro instead of the Territory;

Over the Operating Phase, Canberra Metro will pay the Licence Payments to the Finance Company

instead of the Territory. The Finance Company will use the Licence Payments to pay principal and

interest in respect of the Senior Debt Facility.

2.3 Risk Transfer

The risk allocation in the Project Agreement is consistent with The Partnerships Framework under which

the Territory seeks to achieve best value for money by allocating risks to the party best able to manage

them. This process results in various risks being:

retained by the Territory

transferred to the private sector, and/or

shared between the parties.

The Project Agreement and associated documents establish the obligations of each party in managing

these risks.

Appendix D provides a high-level outline of the risk allocation for the Project. Where a risk is allocated to

both parties, the parties may not share that allocation equally. All risks are dealt with in detail in the Project

Agreement and associated Project documents.


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2.4 General Obligations of Canberra Metro

Canberra Metro has contracted with the Territory to finance, design and construct the Capital Metro Project

and provide related operations and maintenance to the light rail system over a 20-year term. The Project

Agreement details Canberra Metro’s minimum obligations, including:

Delivery Phase Obligations:

Coordinate and manage the design and construction of the Project in accordance with the Project

Agreement and design requirements so that the assets, when manufactured or constructed, will be

fit for their purpose and will comply with all relevant standards

Ensure the safety of people and property in the vicinity of the Project and minimise obstruction,

interference and nuisance during the course of delivery

Liaise with all relevant government agencies and utilities providers to coordinate its activities and

ensure the provision and integration of all utility and external infrastructure in the vicinity of the

Project

Satisfy the requirements of and comply with all key planning approvals, including all conditions and

requirements of such key planning approvals

Comply with all environmental requirements; the delivery phase program and the delivery phase

licence

Procurement of necessary debt and equity to fund the delivery of the Project

Take out a range of insurances and ensure that all insurance proceeds received under the contract

works policy or the industrial special risks policy be deposited into the Insurance Proceeds Account

Undertake commissioning of the Project in accordance with the requirements of the National Rail

Safety legislation

Undertake the balance of the works required to achieve final completion including rectifying defects

Operating Phase Obligations:

Perform the operations and maintenance requirements in accordance with the operating and

maintenance requirements in the Project Agreement throughout the 20-year operating phase

Carry out asset management activities (including scheduled refurbishments) so the system meets

the fitness for purpose requirements in the Project Agreement

Undertake all necessary tasks to ensure that the Project assets are handed back to the Territory on

expiry of the Operating Phase in accordance with the requirements set out in the Project Agreement

The full array of Canberra Metro’s obligations is contained in the Project Agreement and ancillary contracts.

2.5 General Obligations of the Territory

Under the terms of the Project Agreement the Territory has retained certain obligations. The following is a

summary of some of the key Territory obligations:

Acquire the necessary Development and Works approvals for all permanent works

Procure the grant of licences to allow Canberra Metro to access Territory land required for the

construction of those works

Establish and facilitate a community advisory group to seek to ensure stakeholder and community

involvement in the Project


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Review and endorse design documentation and other material that will be submitted by Canberra Metro

in accordance with the Project Agreement

Make services payments to Canberra Metro during the operating phase of the Project (subject to

abatement that may apply if the services are not delivered to the required standards)

The full array of the Territory’s obligations is contained in the Project Agreement.

2.6 Payment Mechanism and Abatement Regime

The Territory will make a one-off Territory contribution payment to Canberra Metro once the works have

been certified as complete in accordance with the Project Agreement. The Territory Contribution amount is

$375million. In addition to the Territory Contribution, the Territory will make monthly service payments to

Canberra Metro on commencement of the Operations Phase.

During the operating phase, the Territory will make monthly service payments to Canberra Metro (in

arrears) in accordance with the payment mechanism set out in the Project Agreement. This payment

mechanism has been structured to establish financial incentives for Canberra Metro to deliver the services

required.

2.6.1 Abatement regime

As part of the payment mechanism, an abatement regime applies to Canberra Metro for any sub-standard

performance in the provision of the services. The intention of this regime is to ensure that payments to

Canberra Metro reflect its performance in providing the required number of light rail services each day, and

that services arrive and depart at times consistent with the agreed timetable.

Abatements may also be made in relation to Canberra Metro’s performance in relation to Key Performance

Indicators (KPIs) including those which measure the quality of the assets, corridor condition, customer

satisfaction and Asset availability during the Term.

A summary of the abatements for which there will be a reduction in the monthly service payment made are:

Availability adjustment– a reduction in availability of the service during the previous month

On time running adjustment – early or late running of the service during the previous month and

Service quality deduction – a reduction in quality of service provided during the previous month – the

KPIs for service quality fall into the following categories:

Passenger service and communications

Passenger comfort

Asset condition and cleanliness

Systems availability (eg. passenger information displays, public announcements, emergency help

points)

Minimising fare evasion

2.6.2 Changes in costs incurred by Canberra Metro (including Modifications and

Changes in Law)

The Territory may propose a modification to the Project activities at any time during the Project term. This

includes an ability to remove works or services from the Project scope. Under the modifications regime,

Canberra Metro is required to provide an estimate of the cost impacts of any modifications proposed by the

Territory, in a manner that complies with the requirements of the Project Agreement.


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The Territory will pay for this modification either by way of lump sum, milestone payments, or an

adjustment to the monthly service payment (if the modification is to be financed by Canberra Metro). To

provide greater transparency and certainty regarding the cost of modifications, the Project Agreement

specifies a range of pre-agreed margins as being applicable. A regime has also been established that will

enable the Territory to request Canberra Metro to perform additional minor works without the need to

invoke the modifications regime.

In addition to Territory-initiated modifications, the Territory must pay for cost increases arising from certain

changes in law and policy above certain dollar thresholds outlined in the Project Agreement.

Canberra Metro can propose a modification which does not adversely affect its ability to carry out the

Project activities in accordance with the Project Agreement. The Territory may approve or reject the

proposed modification. Canberra Metro will bear all risk and cost associated with carrying out such a

modification.

In addition, and subject to certain conditions, Canberra Metro may be entitled to performance relief under

the Project Agreement and to payment by the Territory where it incurs additional costs and expenses as a

result of the following events:

Breach by the Territory of any Project Documents

During the Delivery Phase, any act or omission of the Territory or relevant Territory-related parties in

connection with the Project other than any act or omission which is authorised or permitted under the

Project Agreement

During the Delivery Phase, remediation of contamination for which the Territory is responsible under the

Project Agreement

During the Delivery Phase, the suspension or revocation of any planning approvals, including as a

result of legal proceedings

The Territory making changes to the signalling system along the light rail corridor

During operations, a fraudulent, unlawful, malicious or reckless act or omission by the Territory or

relevant Territory-related parties in respect of the Project.

Industrial action which directly affects the Project and which Canberra Metro can demonstrate is a direct

result of an act or omission of the Territory or a Territory-related party other than any act or omission

which is authorised or permitted under any Project Document.

Suspension of any works or the delivery of the Services required by law or the Territory because of a

native title claim or the discovery of artefacts that is not caused by an act or omission of Canberra

Metro.

2.7 Proximate Territory Works

The Territory may, at any time during the Project Term, construct, operate, maintain or repair any road or

other means of vehicle, public transport, pedestrian or bicycle access under, on, above or adjacent to the

Project land. This can include providing signalling infrastructure or any other infrastructure or other

improvements, connecting any track, road or other means of vehicle, public transport, pedestrian or bicycle

access to light rail system or implementing a future stage of the light rail network. Where the Territory

exercises these rights, it must compensate Canberra Metro for the following where they are caused by the

Territory undertaking such Proximate Territory Works:

Costs arising from any damage caused to the system;

Its incremental costs arising from any unreasonable disruption and delay to Canberra Metro’s delivery

or operations activities


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2.8 Default, Termination and Step-In Regimes

2.8.1 Default

A default by Canberra Metro under the Project Agreement will entitle the Territory to various remedies.

Where a default has occurred, the Territory will in most circumstances be required to give Canberra Metro

an opportunity to remedy the default. If the default is not remedied by Canberra Metro within the required

cure period, it will escalate to a Major Default.

The Project Agreement also states that a number of events are automatically classified as a Major Default

(e.g. when there are persistent breaches or frequent service failures).

In respect of Major Defaults, Canberra Metro will be given the opportunity to agree a plan to remedy the

default (if the default is capable of remedying) or agree a prevention plan to prevent the default from

recurring (in circumstances where the default is not capable of remedy). Where Canberra Metro fails to

remedy the Major Default within the required period or fails to comply with an agreed remedy or a

prevention plan (as applicable), this will generally, subject to Financier step-in rights, give rise to the

Territory’s right to terminate the Project Agreement.

Certain events of default are so severe that they are not subject to a remedy regime. They give rise to a

Territory termination right immediately upon their occurrence (e.g. insolvency of Canberra Metro). These

events are called Default Termination Events.

2.8.2 Step-In

If an event of default occurs, or an incident occurs which requires an urgent response to protect or repair

the Capital Metro Project, or the Project activities are suspended following a force majeure event, the

Territory can step-in to remedy the situation.

In stepping-in, the Territory temporarily assumes total or partial management and control of the Project

activities and can access the site and take such steps as are necessary in the reasonable opinion of the

Territory to perform any Project activities as required to minimise the effect of the step in event.

During step-in the Territory has its costs reimbursed via a reduction in the monthly service payment.

Canberra Metro must recommence performance of its obligations under the Project Agreement when the

Territory steps out.

Step-in rights for the Territory, as specified in the Project Agreement, can be triggered when:

a major default or default termination event occurs.

an emergency occurs.

the Territory is entitled by law to act to discharge a statutory power or duty

any project activities are suspended following the occurrence of an intervening event (e.g. flood, fire,

explosion, earthquake, natural disaster, bushfire, landslide or earthquake).

2.8.3 Termination

The Project Agreement can be terminated under a number of scenarios. Where it is terminated before

expiry of the 20 year operating phase, Canberra Metro may be entitled to a termination payment

(depending on the reason for termination). The three types of termination payments set out in the Project

Agreement are summarised below:

Termination for convenience - The Territory may terminate the Project Agreement at any time by

giving not less than 60 Business Days notice in writing to Canberra Metro. If the Project Agreement is

terminated for convenience, the Territory will pay Canberra Metro a termination for convenience

payment. This amount is generally calculated as Canberra Metro’s outstanding Project debt, plus the


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fair market value of Canberra Metro’s equity, plus any other reasonable costs incurred by Canberra

Metro as a result of the termination.

Force Majeure Termination Event - Where the Project Agreement is terminated for force majeure (e.g.

earthquake, bushfire, landslide), or the Capital Metro Project is wholly or substantially damaged or

destroyed upon the occurrence of an uninsurable risk, the Territory will pay Canberra Metro the general

termination event payment. This amount is generally calculated as Canberra Metro’s outstanding

project debt plus any other reasonable costs incurred by Canberra Metro as a result of the termination,

less any insurance proceeds.

Termination for Canberra Metro default - Where the Project Agreement is terminated for Canberra

Metro’s default, the Territory will pay Canberra Metro the fair market value of the Project determined by

an independent expert or as a result of a re-tender of the contract to the market. In either case, the

Territory recovers its costs and if the calculation results in a negative number, it will be deemed to be

zero.

The basis for the calculation of the termination payment will be determined by the reason for the

termination as summarised in Table 9.

Table 9: Termination options

Event Trigger Termination Payments

Termination for Convenience

The Territory may at any time, for reasons of its own choosing, unilaterally elect to terminate the Project Agreement for convenience.

The outstanding debt as at termination date plus the fair market value of the equity as assessed by the Independent Expert together with other reasonable costs.

Termination for Force Majeure

The occurrence of a Force Majeure Termination Event (including an uninsurable event for which the Territory does not act as the insurer of last resort).

The outstanding debt as at the termination date plus other agreed costs.

Default Termination Event

The Territory may terminate the Project Agreement if certain events of default have occurred and not been remediated in accordance with the Project Agreement.

The Project’s fair market value determined by tendering or an Independent Expert. An Independent Expert must be used in certain circumstances including where there is no liquid market.

The termination provisions contained in the Project Agreement are consistent with the specific guidelines

for termination payments by government, as set out in the National PPP Guidelines, and consistent with

recent market precedent.

2.9 Finance

2.9.1 Initial Financing

Canberra Metro is responsible for the provision of debt and equity finance for the Project. Its financing for

the Project comprises senior debt and equity as follows:

Senior debt comprises a capitalising construction system which converts to a term loan on

commencement of the operating phase

Equity provided by John Holland Pty Ltd, Pacific Partnerships, Mitsubishi Corporation and Aberdeen

Infrastructure and will provide the equity required for the Project


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The Territory and Canberra Metro’s financiers hold a range of security over the Project’s assets in order to

secure their interest in the Project.

2.9.2 Future Refinancing

Canberra Metro’s debt may be refinanced during the Project term. In accordance with the Project

Agreement, the Territory is entitled to a specific share of future refinancing gains. The Territory is not

exposed to any future refinancing losses: these will be borne by Canberra Metro. This was seen as a

positive risk allocation outcome for the Territory.

2.10 Territory Rights at Expiry of Contract

At the end of the Operating Phase, the Capital Metro assets will revert back to the Territory at no cost.

Starting from 2 years prior to the expiry of the Operating Phase, Canberra Metro and the Territory will carry

out periodic joint inspections of the Capital Metro facilities, including the maintenance depot, to determine

the maintenance and repair work required before handover. Canberra Metro must then undertake this work

in order to achieve the asset condition required under the Project Agreement.

If Canberra Metro does not complete certain works before handover, the Territory may issue a notice

specifying matters requiring rectification and setting out the amounts which the Territory considers it will

spend to rectify those matters. This amount will be a debt due and payable by Canberra Metro to the

Territory.

2.11 Current Version

This document may be updated from time to time. Please check with the contacts listed at Appendix B for

the current edition.


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Appendix A – Useful references

Project documentation, including the Project Agreement, is available at:

www.procurement.act.gov.au/contracts.

ACT Government Treasury policy guidance and Project information is available at:

http://apps.treasury.act.gov.au/partnerships-framework.

The Capital Metro: www.capitalmetro.act.gov.au

The Project website: http://actlawcourtsproject.com.au

http://www.procurement.act.gov.au/contracts


http://www.capitalmetro.act.gov.au/

http://actlawcourtsproject.com.au/


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Appendix B – Key contact details

Capital Metro Agency – Director-General

Website: www.capitalmetro.act.gov.au

Director-General, Capital Metro Agency

Level 1, 490 Northbourne Avenue

Canberra ACT 2601

Phone (02) 6207 8658

Infrastructure Finance Advisory Division

Website: www.treasury.act.gov.au

Executive Director, Infrastructure Finance and Advisory

Chief Minister, Treasury and Economic Development Directorate

Nara Centre, 1 Constitution Avenue

Canberra ACT 2601

Phone: (02) 6207 5650

http://www.capitalmetro.act.gov.au/

http://www.treasury.act.gov.au/


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Appendix C – RFP Evaluation Criteria

The Territory evaluated each Proposal against the following Evaluation Criteria:

Evaluation Criteria

Criteria Description

Customer

Experience

The Territory will evaluate the extent to which the Proposal will maximise positive

Customer experience, promote patronage growth and deliver continuous improvement

throughout the organisation.

Operations and

systems

Performance

The Territory will evaluate the extent to which the Proposal:

Delivers efficient and high quality operations, performance reliability; is

responsive to Incidents; and presents a secure and attractive System to

Customers;

Provides a competitive journey time; and

Delivers consistently high levels of asset performance and optimised whole of

life outcomes.

Accreditation The Territory will evaluate the extent to which the Proposal [includes]:

A rail safety Accredited Safety Management System for the effective control

and management of Delivery Phase and Operations

Safety The Territory will evaluate the extent to which the Proposal will deliver adherence to all

applicable, relevant, and necessary requirements in relation to Work Health and Safety

(WH&S) Legislation (including relevant Commonwealth Funding Conditions) throughout

the Term.

Integrated

Design and

Technical

Solutions

The Territory will evaluate the extent to which the design and technical solutions

support the delivery of an integrated, sustainable and high quality public transport

system that will enhance the urban environment, promote sustainability, allow for future

growth and stimulate urban renewal.

The design and technical solution is to ensure an optimal and innovative integration of

the light rail with both the landscape and built form recognising the prime location along

the gateway to the national capital.

Delivery

The Territory will evaluate how the Respondent intends to deliver the Works, with

respect to the:

Disruption to residents, business owners and existing road and transport

networks;

The risks of delivery in terms of time, cost and performance;

The methods to assure the performance of the Light Rail System through

design, construction, testing, commissioning and completion;

Meeting the Sustainability Requirements of the Territory; and

The Delivery Program and Date for Services Completion having paid

cognisance to the above.

Visions, Values

and

The Territory will evaluate the extent to which the Shortlisted Respondent’s vision for

the Project is robust and achievable and includes a commitment to developing and


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Evaluation Criteria


Partnership

maintaining a co-operative and responsive relationship with the Territory and its key

Stakeholders.

Communication

and

Engagement

The Territory will evaluate the extent to which the Proposal:

Demonstrates leading industry practice and innovative approaches to

delivering partnership and engaging with the community and stakeholders

during the Delivery and Operations Phases; and

Demonstrates a high level of understanding of current community expectations

and stakeholders within the Territory and delivers a media and marketing

methodology and social media campaign that gives confidence in effective

delivery.

Commercial

and Financing

The Territory will evaluate the extent to which commercial and financing arrangements

proposed by Shortlisted Respondents support the Project Objectives of the Territory.

In evaluating this Evaluation Criteria, the Territory will have regard, including but not

limited, to:

The financial capacity of the Shortlisted Respondent Members, and Parent

Company Guarantors, if applicable;

The proposed role of the equity providers over the Term;

The proposed Financing Plan;

The proposed financial support and security arrangements;

The proposed Commercial Opportunities; and

The information provided within the Local Industry Participation Plan.

Legal and risk

allocation

The Territory will evaluate the commercial solution proposed by Shortlisted

Respondents for the delivery of the Project including the downstream arrangements of

Shortlisted Respondents and the extent to which the Shortlisted Respondents’ accept

the Territory’s preferred risk allocation for the Project.

In evaluating this Evaluation Criteria, the Territory will have regard, including but not

limited, to:

The proposed consortium structure including the appropriateness of the

proposed commercial and legal relationships of the Shortlisted Respondent

Members;

The proposed contractual arrangements between Project Co and its

subcontractors;

The resultant risks to the Territory, including:

- as a consequence of any departures to the Draft Territory Project Documents;

- contract execution risk;

- any risk of delay in achieving Contract Close and Financial Close; and

- compliance with the Territory’s insurance requirements.


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Evaluation Criteria


Risk-Adjusted

cost

The Territory will evaluate the whole-of-life, risk-adjusted cost of each Proposal. In this

regards, the Territory’s considerations will include adjustments to reflect any departures

in regards to, but not limited to:

The proposed technical solution;

The proposed risk allocation and contractual arrangements;

The proposed financial arrangements;

The proposed basis of escalation; and

The proposed commercial opportunities.

In evaluating this Evaluation Criteria, the Territory will have regard to how the Proposal

compares to the Territory’s stated affordability bound, component parts of the whole-of-

life risk-adjusted cost of each Proposal and competing Proposals.


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Appendix D – General Risk Profile

Risk Category Description Territory Canberra

Metro

Land, Site and Planning

Access Risk of not acquiring agreed site and making it available to the Consortium

Obtaining Works Approval Risk of not obtaining NCA Works Approval

Obtaining other planning approvals

Risk of not obtaining planning and other building approvals

Additional approvals Risk of design changes during implementation requiring further planning approvals

Geotechnical and Environmental issues

Risk of dealing with identified geotechnical and environmental issues and other site conditions

Environmental Impacts Risk of environmental impacts from the Consortium’s activities

Native Title Risk of unexpected native title claims, artefacts discovery, and/or declaration of a heritage site

Accreditation

Rail Safety Regulator Risk of not obtaining accreditation from the Rail Safety Regulator

Design, Construction and Commissioning

Utilities Risk related to adequacy of utilities relocation and other enabling works

Design interface Risk related to the overall management of design interfaces

Design interface (third parties)

Risk of design interfaces with third parties, including Territory specified technologies

Design risk Risk that the detailed design doesn’t meet the requirements

Construction risk Risk related to the overall management of construction interface

Access Risk of the Territory not providing the access as agreed in the construction schedule

Public liability Public liability risk arising out of the project (including personal injury and property damage) and work health and safety risk

Design risk The risk that the design development activities cannot be completed on time


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Metro

and/or to budget and the design does not allow the delivery of the Services to in accordance with the Scope and Performance Requirements

Construction risk The risk that construction activities cannot be completed on time and/or to budget

Defects risk The risk that defects are identified following completion of construction

Equipment Responsibility for the selection, procurement and maintenance of equipment

Fit for purpose (commissioning)

Risk that the light rail system is not constructed so as to be fit for purpose or do not comply with contractual obligations

Modification If the Territory elects to make a significant variation to the light rail system

Commissioning and Completion

Risk that the New System cannot be commissioned in accordance with the agreed commissioning criteria

Operational Risks

Fit for purpose (operating) Risk that the light rail system is not able to deliver the Services and/or is not fit for purpose at the required levels

Interface Risk that the light rail system does not interface with third party systems and utilities.

Operational costs Risk that operational costs exceed Canberra Metro’s budgeted cost over the operating phase

Lifecycle costs Risks associated with the replacement and refurbishment of light rail facilities over the operating phase of the Project

Safety Safety risks of passengers, staff and road users.

Change in Law or Policy Risks

Changes in Law and Policy (General)

Risk that a change in legislation / regulations, Territory policy or quality standard, which applies generally, will impact on the design or construction of the New System or provision of the Services

Changes in Law and Policy (Project Specific)

Risk that a change in legislation / regulations, Territory policy or quality standard, which expressly and exclusively applies to the Project, will impact on the design or construction of the New System or provision of the Services

Tax risk Risk of changes in income tax, GST or the


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Metro

introduction of a tax affecting companies generally

Finance Risk

Funding risk Risk of providing funds to meet design and construction costs

Foreign exchange Risk of foreign exchange movements after Financial Close

Interest rate Risk of movements in base interest rates from Financial Close to the first refinancing point

Refinancing Risk of losses on debt financing

Commercial

Ticketing Risk related to the implementation of any ticketing and revenue protection responsibilities

Patronage Patronage risk